WASHINGTON/NEW YORK, Oct 29 (Reuters) - Hurricane Sandy isshaping up to be one of the biggest storms ever to hit theUnited States but even with the severe damage that is expected,the blow to the economy is seen as short-term.

Economists say some of the impact caused by businessesclosing will be offset by reconstruction efforts, and point tocatastrophic storms like Katrina, which devastated New Orleansbut did not deal lasting damage to the national economy.

Still, Sandy's sheer breadth - 10 states have declared astate of emergency - means it could hurt this quarter's economicoutput, even if the long-term impact ultimately proves neutral.

Gross domestic product in the region between New York andWashington amounts to some $2.5 trillion, so every day theregion's economy is halted amounts to about $10 billion in lostoutput, said Mark Zandi, chief economist at Moody's Analytics.

Peter Morici at the University of Maryland estimates thatSandy will cause about $35 billion to $45 billion in losses anddamages but then be followed by as much as $36 billion inrecovery spending.

Predicting the impact of Sandy is made all the harder bycomplexity of the rare, hybrid "super storm" involving otherweather systems that could get trapped over the NortheasternUnited States and amplify inland flooding.

"The range of possible scenarios for Hurricane Sandy remainsenormous. There are examples of natural disasters ultimatelyexacting only minimal toll - Irene - and others havingan outsized impact, such as Hurricane Katrina when the (NewOrleans) levees broke," said Eric Lascelles, chief economist RBCGlobal Asset Management Inc. "Really, it is a game ofprobabilities."

The toll from Katrina in 2005 exceeded $100 billion by mostaccounts. U.S. economic growth slowed in the quarter after thedevastation inflicted on New Orleans but bounced back quickly.

The U.S. economy grew 2 percent in the third quarter of2012, picking up from earlier in the year but still a weaknumber, as consumer spending helped to offset a worrisomepullback in business investment. Many analysts were alreadyconcerned that retail sales could suffer later this year.

Retailers bear a significant brunt of any storm's economicimpact as shoppers stay at home. But the last-minute scramblefor supplies and emergency goods has a moderating effect on theoverall sales declines.

Still, Evan Gold, a senior vice-president at Planalytics, aPhiladelphia consulting firm that advises businesses onweather-related matters, was less optimistic about seeing anyupside, particularly with Sandy hitting so close to the holidayseason.

"If consumers in this part of the country are spendinghundreds, if not thousands, of dollars to buy things likegenerators, or after the storm, to do clean-up, that is likelygoing to cut into budgets that people might have for theirholiday shopping," said Gold.

FORECASTERS CHANNEL METEOROLOGISTS

One thing economists do agree on is that data releases incoming weeks will be even harder than usual to forecast. Forinstance, the impact of Sandy is likely to skew figures onweekly jobless benefit applications and chain store sales.

"The monthly economic data will become more volatile -October retail sales, vehicle sales, and industrial productionwill be hurt, but they will bounce back in November andDecember," Zandi said.

"Restaurants will be hurt, but grocery stores will benefit;general merchandise stores will lose business, but onlineretailing should get a boost, he added. "Of course, if the stormknocks out major infrastructure like refineries, cell towers,trains, sea and airports, then the economic damage will be moresevere and difficult to recover from."

The hurricane has the potential to cause some of thelargest losses the global insurance industry has faced thisyear, but nothing that would strain insurers financially asidefrom hurting earnings this quarter, according to analysts.

Sandy may also add to the financial headaches for alreadycash-strapped local governments which will probably have tospend millions of dollars to protect citizens and fix damagefrom high winds and floods.

But over the long run, they are likely to be able to copewith the extra burden which will be offset by federal aid andrainy-day funds, analysts said.

"Sometimes there are liquidity issues in the beginning butgenerally, these things have no long-term effects on finances,"said Amy Laskey, managing director at Fitch Ratings. "Sometimesthe added spending is a positive for local economies."